Stephen D. Cannerelli / The Post-StandardSlate Hill Constructors of Warners work on a drainage project on Route 54A in Hammondsport, on the southern tip of Keuka Lake. The project is the first state contract using stimulus money. They will be working on 54 drainage sites over an 8-mile stretch along the west side of Keuka Lake. They should be finished by October.

Frank Ordoñez / The Post-StandardJeff Hanlon is president of Slate Hill Constructors, the first company to win a state contract using federal stimulus money.

Warners, NY -- Slate Hill Constructors Inc. laid off 40 seasonal construction workers last year, and the company spent the winter in intense competition for the summer's road and bridge projects. Like everyone, the company, based in Warners, lowered its prices. It expanded its range to the North Country and the Southern Tier. It found itself with new competition -- companies that usually worked only private projects.

By the end of April, company President Jeff Hanlon was weighing whether he would have to skip raises for the first time in 24 years.

No more.

The highway money is flowing in New York, thanks to the federal economic stimulus package. Slate Hill won the state's first contract to be paid by stimulus money, and it demonstrates the real-life ripple effect of the hurry-up spending.

» Find links to help you track New York's stimulus money at the In Depth blog.

New York is suddenly under pressure to name $392 million in federal economic stimulus projects by the end of June. The federal government told the states to spend the first round of money in 120 days or lose it. The state will have to spend another $728 million by March 2010 or lose that.

In the end, the states that spend money the fastest could be in line to take money from the states that can't meet deadlines. New York officials have said they will aggressively pursue that money.

New York's Department of Transportation projects that would have been paid for with other money have been quickly moved to the new federal stimulus program. The federal government allows states to use stimulus money for transportation projects in the works as long as the states still spend the same amount of money on other jobs.

The state normally spends about $1.6 billion a year on transportation projects.

Slate Hill won a $733,831 contract to repair 50 culverts that could have collapsed and washed out Route 54A in Steuben County. The project was advertised Feb. 4 -- 13 days before President Barack Obama signed the $787 billion federal stimulus bill into law. The other federal aid planned for that project can be used for other work.

Slate Hill has also won a $6.4 million contract to rehab nine arches on a 450-foot stone bridge in St. Lawrence County. Hanlon is bidding on more and more projects every week.

The employees got their raises. Hanlon sent 10 of the laid-off seasonal employees to the Steuben County job, two hours away.

Hanlon, whose company has 10 full-time workers, said he has always tried to grow the business with caution. He tries to hire only as many people as he can bring back for the next construction season.

"My No. 1 goal is to provide jobs for all the guys I had last year," he said.

But the whole point of the federal stimulus money is to add jobs.

The governor's office said to expect $89 million in Southern Tier transportation spending to create 2,136 jobs. That is based on the Federal Highway Administration's estimate that 24 jobs are created for every $1 million spent on transportation construction.

Hanlon has a stack of resumes twice as tall as he did last year. A guy handed him a resume on the golf course one night. Hanlon said he thinks he will grow the business beyond last year's 50 employees, but he has to be careful.

Stephen D. Cannerelli / The Post-StandardA worker crawls into a drainage hole during construction on Route 54 A in Hammondsport.

"I think putting money in construction is very useful, and I really think we're starting to see results," he said. "But is this going to be a bubble, and is the funding going to fall off after two years? There's a real need to come up with a permanent funding solution for the deteriorated condition of roads and bridges."

Hanlon opened his books to show how the state's first stimulus contract will flow through his business and to the subcontractors and the equipment salesmen who stopped in his office in the winter to offer big discounts.

First, Slate Hill will pay $187,000 in wages and $89,000 in health and pension benefits. The company will pay $31,000 in state and federal taxes and unemployment insurance and $17,000 in workers' compensation insurance. About $52,000 will pay for general liability insurance.

The company will buy three kinds of pipe, grout, concrete, gravel and miscellaneous brick and mortar and nuts and bolts. Some of the money will go into a general account for maintaining and buying new equipment.

He rented a seasonal camp on Keuka Lake for the 10 workers to stay for three months. He rented an office in Hammondsport for the engineer.

Skanex Pipe Services Inc., of Victor, will supply specialty fiberglass work for pipes. Other pipes will come from Kentucky and Massachusetts. Small tools could come from three suppliers in Syracuse and Rochester. Whitacre Engineering Co., of Liverpool, will supply rebar -- the steel bars that reinforce concrete. Elderlee Inc., of Oaks Corners, will reset the guardrail.

Jim Hurst, of Moravia, was called back to work as superintendent on the Steuben County culvert job. He has worked for Hanlon since 1997 and is used to being laid off over winter.

"You're always very careful, no big expenses," he said. "I always have a lot of faith in the office people getting us work."